Three new pieces of legislation implementing Franceschini Act on cinema and audio-visual media services

1. Three Legislative Decrees implementing the reform of the Italian legal framework on cinema and audio-visual services laid down by Law no. 220 of 14 November 2016 (known as Franceschini Act, after the name of the incumbent Minister of Cultural Heritage and Activities and Tourism) were released on last December with respect to (i) the promotion of European and Italian works (Legislative Decree no. 204 of 7 December 2017), (ii) the protection of minors (Legislative Decree no. 203 of 7 December 2017) and (iii) the employment in the audio-visual sector (Legislative Decree no. 202 of 7 December 2017). Further to the Government’s preliminary approval of 2 October 2017 and the subsequent opinions collected from parliamentary committees, Council of State and State/Region Conference, the three Legislative Decrees were finally approved by the Government on 7 December, published on the Official Journal on 28 December 2017 and entered into force on 12 January 2018. Some significant amendments have been introduced by the relevant provisions, especially with regard to Legislative Decree no. 204/2017.2. Legislative Decree no. 204 of 7 December 2017 on the promotion of European and Italian works provides for a progressive increase of the content and investment quotas that all TV broadcasters are required to reserve to European and Italian works. Also on-demand service providers are required to comply with specific obligations.

Such Legislative Decree has been strongly opposed by TV broadcasters and, in the same time, warmly welcomed by film producers, especially independent producers.

The minimum quotas provided for by the Decree are summarized in the tables below.

-Content Quotas

National broadcasters

Public service broadcaster

On-demand service providers

EU works

50.01% for 2018, increased to:

– 53% for 2019

– 56% for 2020

– 60% from 2021

50.01% for 2018, increased to:

– 53% for 2019

– 56% for 2020

– 60% from 2021

From January 2019, 30% of the catalogue to be EU recent (i.e. last 5 years) content

Works of Italian original expression produced anywhere

From January 2019 sub-quota of 1/3 of the quotas above

From January 2019 sub-quota of 1/2 of the quotas above

From January 2019, a sub-quota of not less than 50% of the quota above (i.e., no less than 15% of the catalogue)

Primetime (h. 18-23)

6% for cinematographic and audio-visual works of Italian original expression produced anywhere (specifically fiction, animation, original documentaries or other works of high cultural or scientific content, including the TV edition of theatrical works)

12% for cinematographic and audio-visual works of Italian original expression produced anywhere (specifically fiction, animation, original documentaries or other works of high cultural or scientific content, including the TV edition of theatrical works), 1/2 of which reserved to cinema

All quotas and sub-quotas are calculated net of TV news, sport, quiz, advertising, teletext and teleshopping programs. All quotas and sub-quotas must be met on an annual basis, except for the Primetime quotas which must be met weekly.

-Investment quotas

Commercial broadcasters

Public service broadcaster

On demand service providers

EU works

-10% of the annual net revenues for 2018 (to be devoted entirely to independent producers) reserved to pre-purchase, purchase or production of EU works, increased to:

– 12.5% for 2019 (5/6 of which for independent producers)

– 15% from 2020 (5/6 of which for independent producers)

15% of the annual total revenues for 2018 (to be devoted entirely to independent producers) reserved to pre-purchase, purchase or production of EU works, increased to:

– 18.5% for 2019 (5/6 of which for independent producers)

– 20% from 2020 (5/6 of which for independent producers)

From January 2019, 20% of the annual net revenues in Italy to be invested in EU works of independent producers, particularly recent works (last five years)

From January 2019, quota to be met also by providers having the editorial responsibility of offers directed to Italian consumers, even if based abroad

Cinematographic works of Italian original expression produced anywhere by independent producers

Sub-quota of 3.2% of the annual net revenues for 2018, increased to:

– 3.5% for 2019

– 4% from 2020

– 4.5% from 2021

Sub-quota of 3.6% of the annual total revenues for 2018, increased to:

– 4% for 2019

– 4.5% for 2020

– 5% from 2021

Works of Italian original expression produced anywhere

From January 2019, a sub-quota of not less than 50% of the quota above (i.e., no less than 10% of the net revenues made in Italy)

Animation works for child education produced by independent producers

Sub-quota of 5% of the quota provided for EU works

Audio-visual media service providers may apply with the Italian Communication Authority for exemption from the quotas’ obligations reported sub A and B above if:

(i) the thematic character of the programming schedule or catalogue does not allow to supply from European independent producers or to purchase, pre-purchase, produce or co-produce European audio-visual works;

(ii) the audio-visual media service provider’s market quota is lower than a specific quota determined by the Authority; or

(iii) the audio-visual media service provider did not achieved profits in each of the last 2 years of operation.

The Ministry of Economic Development and the Ministry of Cultural Heritage and Activities and Tourism shall issue, within 90 days from the entering into force of the Decree, relevant regulations implementing the provisions on works of Italian original expression produced anywhere (e.g. relevant definition; possible sub-quotas – for both transmission (including Primetime) and investment – in any event not lower than those reported above); Primetime quotas’ obligations shall apply once such Ministerial regulations are issued.

The Ministerial regulations concerned, to be updated at least every three years, inter alia:

– may set forth additional sub-quotas for specific kinds of works produced by independent producers, with specific reference to the works realized during the last 5 years and the cinematographic and audio-visual works of fiction, animation, original documentaries or other kinds of audio-visual works;

– in case of cinematographic and audio-visual works of fiction, animation and/or original documentaries of Italian original expression produced by independent producers, provide for the investment quotas’ obligations to be fulfilled through the purchase, pre-purchase or co-production of works; and

– taking into account any agreement between audio-visual media service providers associations or between an audio-visual media service provider and the most representative trade associations of cinematographic and audio-visual Italian producers, set forth (a) specific criteria for complying with the quotas’ obligations above, with particular reference to purchase, pre-purchase, production or co-production conditions and (b) criteria related to maximum duration of exploitation of the works and criteria to determine value of each exploitation right.

The Italian Communication Authority shall issue, within 90 days from the entering into force of the Decree, resolutions aimed inter alia at further detailing the definitions of “independent producer”, “annual total revenues” and “annual net revenues” as well as setting forth technical specifications for complying with quotas’ obligations and relevant exemptions.

An ad hoc resolution shall be issued by the Italian Communication Authority, within 180 days from the entering into force of the Decree, in connection with on demand service providers’ obligations.

The sanctions for non-compliance, significantly raised by the Decree, range from a minimum of 100,000.00 Euros to a maximum of 5 million Euros or up to 1% of annual revenues.

3. Legislative Decree no. 203 of 7 December 2017 on the protection of minors amends the provisions on censorship, by suppressing the absolute prohibition of works’ release in cinemas as well as releases conditioned to cuts or amendments.

Further, the Decree enhances the role of the distributors and producers of cinematographic works, who are required to classify the works properly with a view to balancing freedom of expression and protection of minors and taking into account the age of the recipient public. The following classification system has been implemented: (a) works for everybody, (b) works not suitable for minors under the age of 6, (c) works forbidden to minors under the age of 14 and (d) works forbidden to minors under the age of 18.

Once having classified the relevant work, distributors and producers are required to submit a copy of it to the new Committee for the classification of cinematographic works (replacing the previous 7 Committees for film review) at least twenty days before the work’s first release. Within twenty days, the competent Committee issues its opinion on the proposed classification of the work, which is noticed by the Directorate General of Cinematographic works to the applicant. If no opinion is given within the aforementioned term, producers and distributors are permitted to release the cinematographic work but they would need to conform to the Committee’s opinion, once issued, by changing the work’s classification if necessary. Applicants can appeal the opinion of the Committee within fifteen days as of the release of the same.

Finally, the Decree delegates the Italian Communication Authority to release a relevant resolution governing the classification of audio-visual works intended for web and videogames. The Ministry of Cultural Heritage shall be consulted before the approval of the regulation, that aims at balancing protection of minors and freedom of expression. Also, the forthcoming regulation, to be issued by 120 days as of the date of publication of the Decree, shall take into account the existing legislation concerning, among others, the definition of appropriate technical measures of parental control and the existing international standard and best practices in the sector.

4. Legislative Decree no. 202 of 7 December 2017 takes the consequences of the recent reform concerning employment relationships knows as “Jobs Act” in the specific sector of audio-visual and cinematographic environment.

Inter alia the Decree extends the derogation to the numerical limitation for hiring temporary workers to be employed in activities related to the production of specific audio-visual works: accordingly, employers can hire fixed term employees over the 20% limits of the permanent employees in force in the same year.

Further, it provides for a relevant resolution, to be issued within 180 days from the entering into force of the Decree itself, establishing national criteria for defining an uniform classification system for artistic and technical professions into the above-mentioned audio-visual and cinematographic sector.